Investment properties Properties which are held for investment purposes are included in the balance sheet at their estimated market value. Investment properties are formally revalued at least every five years by professional valuers and are reviewed annually to ensure that the most recent formal valuation is still reasonable. No depreciation is provided on investment properties.
Stock Stock and consumables purchased for sale and research are valued at the lower of cost and net realisable value on a ‘first in, first out’ basis. Stock does not include the value of goods donated for sale in the Group’s charity shops.
Short-term deposits Short-term deposits are current asset investments that are readily convertible into cash at or close to their carrying amount.
Fund accounting Restricted funds can only be used for particular purposes within the objects of the Charity and its charitable subsidiaries. Restrictions arise when specified by the donor or when funds are raised for particular purposes.
Permanent endowment funds are funds where the capital is held until the objects of the Charity, or of the trust deeds of each fund, are satisfied.
General funds are funds that can be used for any purpose within the Charity’s objects. Pension deficit is reflected separately in reserves in accordance with the SORP.
Pension costs The current service cost of the defined benefit scheme is charged to employee costs over the anticipated period of employment. Net pension finance income or costs are included immediately in employee costs. Actuarial gains and losses are recognised immediately on the face of the SOFA. A provision for the scheme deficit is shown on the face of the balance sheet. The amounts charged to the SOFA for defined contribution schemes represent the contributions payable in the period.
Property dilapidation provision The Group recognises dilapidation costs as they crystallise, or when plans to terminate the lease are confirmed.
Foreign currency Transactions in foreign currency are recorded at the rate of exchange prevailing at the time of the transaction. Foreign currency balances are translated into sterling at the exchange rates prevailing at the balance sheet date. Any resulting gains or losses on exchange are included in the SOFA.
The Group hedges net currency exposures (balances or future income and expenditure) of its trading subsidiaries by means of forward exchange contracts of up to 12 months. Gains and losses on forward exchange contracts are recognised in the SOFA at the same time as the hedged exposure.
Profits and losses of foreign subsidiaries are translated to sterling at average rates of exchange. The opening net assets and profit and loss accounts of those subsidiaries are retranslated to year end rates; exchange differences arising on the retranslation are taken to reserves.
Leases Rentals payable under operating leases are charged to the SOFA evenly over the period of the lease.
Taxation The activities of the Charity and its charitable subsidiaries are exempt from corporation taxation under section 505 of the Income and Corporation Taxes Act 1988 to the extent that they are applied to the organisation’s charitable objects. The trading subsidiaries do not generally pay UK corporation tax because their policy is to pay taxable profits as Gift Aid to the Charity. Foreign tax incurred by overseas subsidiaries is charged as it is incurred.
Annual Report and Accounts / Notes to the Accounts / 31
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